Baby Boomers have been retiring in increasing numbers, and now some are dying. They leave behind a giant pile of money that the media have labeled “the greatest wealth transfer” in modern history: a collective net worth that currently sits at $35 trillion, much of which will be passed down to their heirs. It’s so much money that, naturally, the Biden administration is examining ways to tax it, charities and nonprofits are angling for their share of it, and estate lawyers are licking their chops at the prospect of helping to plan how it all gets dispensed.
Yet news stories about this wealth transfer are overlooking something basic: a simple explanation of how boomers accumulated this wealth amid a supposedly massive financial crisis spurred by the alleged inadequacies of our private-sector pension systems, which, four decades ago, began a shift from defined-benefit retirement plans to individual savings accounts. Rather than leaving a generation bereft, as critics have predicted for years, that shift helped place an unprecedented amount of money in the hands of boomers, while laying bare the inadequacy of the defined-benefit systems that persist today in some places—especially in the misguided public sector.
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